The Fed sells $10,000,000 in bonds to Jim, a bond dealer who pays for the bonds with a check drawn on his bank. Assume a 10% required reserve ratio. Which of the following statements correctly records this transaction at Jim's bank with respect to the bank's reserves?
The bank's reserves will go up by $1,000,000.
The bank's reserves will go down by $10,000,000.
The bank's reserves will go up by $10,000,000.
The bank's reserves will go down by $100,000,000.
1
Expert's answer
2012-09-18T11:53:23-0400
The bank's reserves will go up by $1,000,000. Because paying with the check he increases the money amount of the bank by 10,000,000, so the bank needs to increase its reserves by 1,000,000
Numbers and figures are an essential part of our world, necessary for almost everything we do every day. As important…
APPROVED BY CLIENTS
"assignmentexpert.com" is professional group of people in Math subjects! They did assignments in very high level of mathematical modelling in the best quality. Thanks a lot
Comments
Leave a comment